The U.S. had a record quarter in solar installation during the first three months of the year, installing 723 megawatts of photovoltaic capacity for a 33% increase over the same period last year. That represents nearly half of all new generation capacity installed in the U.S. during the first quarter of this year, and puts the solar industry on pace for its best year to date.

GTM Research and the Solar Energy Industries Assn. surveyed roughly 200 utilities, state agencies, installers and manufacturers across 28 states for their quarterly U.S. Solar Market Insight, which ranked California first above New Jersey and Hawaii in photovoltaic installation. National totals in the report include all 50 states, as well as Puerto Rico.

California contributed 408 installations of solar-to-electricity power in the first quarter of 2013, the bulk of which came in the utility market segment, though residential installation continued a steady if incremental increase. This is somewhat surprising given a growing trend of installers forgoing the state’s solar initiative rebate.

According to the report’s executive summary, installers reported finding that once they had incorporated the 30% federal incentive tax credit, their systems achieved “retail rate parity.” As a result, many elected to avoid the tedious state-level application process, which according to the report, “demonstrates the impact that soft costs can have on [photovoltaic] project economics.”

California was among the states that benefited from a drop in installation prices, which hovers somewhere around $4 per watt for residential projects nationally. On average, home installation prices fell 15.8% between the first quarters of 2012 and 2013, though not all states or projects saw that level of easing. The report pointed out system prices for residences could range anywhere from less than $3 to nearly $7 per watt.

SEIA and GTM researchers predict the remaining months of 2013 will round out a banner year, with roughly 4,400 megawatts installed in residential, commercial and utility markets. That’s an especially hopeful forecast for the Golden State considering Southern California Edison’s announcement this month that it would permanently close San Onofre Nuclear Generating Station.

In an interview with The Times on Wednesday, SEIA Chief Executive Rhone Resch said the solar industry would step up to help fill the void left by the nuclear giant. “Obviously California has been a leader for solar energy for some time, but now we’re seeing gigawatts installed on an annual basis,” Resch said. “It is absolutely conceivable that solar will be installed on pace to replace San Onofre.

Resch acknowledged the downward trend in installation price made for a more competitive environment for solar manufacturers.

“The sad truth is a lot of manufacturers will go out of business,” Resch said, “but it is a development that will make the industry stronger. It improves efficiency, and in the long run, California manufacturers will thrive.”